The Importance of Succession Planning in CRE
By Matt Jagodrinski, Managing Director
In an industry where decisions influence millions of dollars in capital, employment, and community development, the continuity of leadership is not merely a human resources concern—it is a business imperative. Succession planning ensures that commercial real estate organizations are prepared for inevitable leadership transitions, whether through retirement, resignation, or unforeseen circumstances.
An Aging Leadership Crisis
According to data from the National Association of Realtors and other industry sources:
The average age of a commercial real estate executive is over 55.
Nearly 40% of CRE executives are expected to retire within the next 10 years.
60% of CRE firms do not have a formal succession plan.
This aging demographic signals a looming leadership gap that could destabilize portfolios, disrupt client relationships, and hinder growth strategies if not addressed through proactive planning.
The Risks of Not Planning for Succession
Failure to implement a robust succession strategy can expose a CRE firm to several risks:
Operational Disruption
A sudden leadership vacuum can disrupt business continuity, delay decision-making, and stall deal flow, especially in lean firms with few redundancies.
Loss of Institutional Knowledge
Experienced professionals carry decades of market insight, client relationships, and operational know-how that are difficult to replicate quickly. Their departure without a transition plan can set firms back years.
Talent Drain
In the absence of a clear succession path, mid-level managers and high-potential employees may seek opportunities elsewhere, perceiving a lack of advancement potential.
Investor and Client Confidence
Stakeholders may question the stability and longevity of the firm, potentially affecting investor confidence, client retention, and access to capital.
Benefits of Proactive Succession Planning
A sound succession plan strengthens the foundation of a CRE firm in several key ways:
Leadership Continuity
Identifying and preparing future leaders ensures seamless transitions during planned and unplanned exits.
Increased Firm Value
A firm with a stable, future-ready leadership team often commands higher valuations during mergers, acquisitions, or capital raises.
Improved Talent Development
Succession planning promotes internal development, training, and mentorship, fostering a culture of growth and loyalty.
Risk Management
Preparedness for key personnel changes minimizes disruptions and protects the firm’s reputation, operations, and financial performance.
Succession Planning in Family-Owned CRE Firms
Family-run CRE firms face unique challenges, including:
Navigating family dynamics
Balancing meritocracy with legacy
Transitioning ownership and control
In these firms, early dialogue, third-party mediation, and clear governance structures are crucial to avoiding internal conflict and ensuring longevity.
Integrating Succession with Strategic Planning
Succession planning should be embedded into the firm’s overall strategic plan. This integration ensures leadership transitions are aligned with broader business goals, such as geographic expansion, diversification, or digital transformation.
The Role of Boards, Investors, and Advisors
Boards and stakeholders play a pivotal role in ensuring accountability around succession planning. They should:
Require annual reviews of succession strategy
Participate in leadership evaluations
Ensure alignment between CEO/partner transitions and firm strategy
Case Studies: Lessons from the Field
Successful Transition – Regional CRE Firm
A mid-sized firm in the Midwest began grooming internal talent five years before the planned retirement of its managing partner. By establishing clear benchmarks and mentorship roles, the firm transitioned leadership smoothly, retained key clients, and saw a 20% increase in deal volume post-transition.
Failed Transition – National Brokerage
A national brokerage firm lost two senior partners unexpectedly without a succession plan in place. It took over a year to stabilize operations, during which they lost three major clients and missed key development opportunities.
Building an Effective Succession Plan
Developing a succession plan is not a one-time event but an ongoing process that evolves with the business. Key components include:
Assess Key Roles
Identify mission-critical leadership and operational roles that would most impact the firm if vacated.
Identify High-Potential Talent
Evaluate internal candidates for readiness, leadership qualities, and alignment with the firm's culture and long-term vision.
Develop Training and Mentorship Programs
Invest in leadership development initiatives to close competency gaps and prepare successors for future responsibilities.
Create a Transition Timeline
Where possible, establish timelines for leadership changes, including mentorship overlap, knowledge transfer, and role shadowing.
Formalize the Plan
Document the succession plan and update it annually. It should be reviewed by legal, HR, and executive teams, and approved by the board or ownership group.
Conclusion: Planning Today for Tomorrow’s Success
Succession planning is no longer optional in the fast-paced, high-stakes world of commercial real estate. It is a strategic imperative that ensures business continuity, protects stakeholder value, and secures the future of the firm.
The firms that plan today are those that will lead tomorrow.
Appendix A: Succession Planning Checklist
Identify key roles and individuals
Conduct leadership assessments
Establish development plans
Create transition timelines
Communicate with stakeholders
Review and update annually
Appendix B: Sample Succession Policy Template
Available upon request – customizable for firm size and structure.